Perkins restaurant chain files for bankruptcy

WILMINGTON, Del. (Reuters) – The owner of the Perkins and Marie Callender’s restaurant chains filed for bankruptcy Monday with plans to close 65 of its 600 locations and cut 2,500 jobs, according to court documents.

Perkins & Marie Callender Inc became the latest food company to fall victim to a sluggish recovery and soaring food prices. Last week, chicken producer Allen Family Foods tumbled into bankruptcy.

Perkins Restaurant & Bakery, a restaurant that offers all-day breakfasts, plans to emerge from bankruptcy by giving ownership of the chain to holders of the company’s unsecured debt, led by funds managed by Wayzata Investment Partners.

The bankruptcy will wipe out the investment of private equity firm Castle Harlan Inc, which acquired the Perkins chain in 2005 for $245 million.

The Marie Callender Restaurant & Bakery chain, known for its pies and home-style meals, was added a year later for $140 million.

Joseph Trungale, who has been president of Perkins & Marie Callender’s Inc since 2004, said in court documents the company was hard hit by a weak economy in states that suffered the worst of the U.S. housing crash, particularly Florida and California.

He also blamed competitors that were able to free up money to invest in new locations due to their own bankruptcy filings.

In recent years, Uno Chicago Grill pizza, Fuddruckers, Charlie Brown’s Steakhouse and Sbarro’s have used bankruptcy to shed debt and revive their businesses.

Perkins was founded in 1958 as a pancake house in Ohio. Marie Callender founded the chain that bears her name in 1948 in Orange County, California, as a wholesale pie business. Combined, the two chains employed about 12,000 before Monday’s job reduction announcement.

The Memphis, Tennessee-based company listed total assets at $290 million and liabilities at $440.8 million in its Chapter 11 petition. Eleven of its affiliates were included in the bankruptcy filing.

It said it had about $103 million in secured notes debt and $190 million in unsecured notes outstanding. It plans to borrow up to $21 million to fund its operations while in bankruptcy.

Last year’s sales were about $507 million.

As part of the bankruptcy, the company sold its Marie Callender trademarks to ConAgra Inc. Prior to the trademark sale, ConAgra had licensed the name for Marie Callender frozen foods it produced.

The bankrupt company received a license to continue to use the name in connection with its restaurants and baked goods.

The case is in re: Perkins & Marie Callender’s Inc, U.S. Bankruptcy Court, District of Delaware, No. 11-11795. (Reporting by Tom Hals; additional reporting by Tanya Agrawal in Bangalore; Editing by Maureen Bavdek)